A significant increase in new-home sales in October certainly sounds like good news for the U.S. economy. The trouble is that many economists, home builders and analysts regard it as too good to be true.

The U.S. Census Bureau reported Wednesday that contracts to sell newly built homes increased by 25.4% in October from the September figure to seasonally adjusted annual rate of 444,000. That’s on par with the sales rate of last spring when the new-home market was surging.

But the Census figures—based on a small sample and notoriously volatile—contradict the findings of monthly surveys by housing market analysis firms as well as recent comments by public home builders that October sales were tepid at best. Read More »

Rising interest rates appear to have taken a bigger bite out of new-home sales than previous reports have suggested.

New-home sales in October jumped by 25.4% from September’s level, according to a government report Wednesday. But sales for June, July, and August were all revised down. Sales in August were 10% lower than previously reported, while June and July were revised down by 0.9% and 4.4%, respectively.

And September’s figure was even worse. September hadn’t been reported as scheduled last month due to the government shutdown in October, and it showed that sales had dropped by 6.6% from August’s downwardly revised level. Sales in September ran at a seasonally adjusted annual rate of 354,000 units, which was 7.8% below the year-earlier figure, the first time in nearly two years that home sales have turned negative on a year-over-year basis. Read More »

‘I think this (slowdown) is a good wakeup call for the industry,’ said Scott Laurie, CEO of builder Olson Co. A home built by Olson in Fountain Valley, Calif., pictured in March.

Weak sales tallies in October mean home builders face a winter full of worry.

A monthly survey of builders across the U.S. by John Burns Real Estate Consulting, a housing research and advisory firm, has found that respondents’ sales of new homes declined by 8% in October from the September level and by 6% from a year earlier.

Last month’s result marked the second consecutive month in which the survey yielded a year-over-year decline in sales volumes, the first dips since early 2011. Read More »

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David Murdock has put his conglomerate Castle & Cooke’s 20,000-lot portfolio of residential land on the market.

Recent multibillion-dollar deals in the home-building industry have emboldened potential sellers, and now billionaire David Murdock has put his conglomerate Castle & Cooke Inc.’s 20,000-lot portfolio of residential land on the market to gauge the interest it attracts.

Many of Castle & Cooke’s home lots are located in California and Hawaii, though it also owns residential land in Arizona and North Carolina. It is known in the mainland U.S. mostly as a developer in secondary and tertiary markets such as Bakersfield, Calif.

Analysts and brokers familiar with the Castle & Cooke residential portfolio say it likely will fetch several hundred million dollars if it is sold, piecemeal or in whole. Any deal would hinge on Mr. Murdock, who owns Castle & Cooke after taking it private in 2000. Separately, he now is trying to take private Dole Food Co., of which he is founder and CEO, in a $1.2 billion deal. Read More »

If you’re in the market for a newly built home and you gamble on waiting until early next year, you might benefit from aggressive discounts offered by the biggest home builders.

D.R. Horton Inc. Chief Executive Donald Tomnitz didn’t mince words on Tuesday in stating that the builder—the largest in the U.S. by number of homes sold—will roll out sales incentives across the country if the sluggish new-home market doesn’t gain momentum by January and February. That’s the start of the spring selling season, when builders traditionally make most of their sales.

“I don’t think there’s any question that we’ll start with incentives if the (slow) pace continues into the strong selling season around Super Bowl Sunday,” Mr. Tomnitz said on D.R. Horton’s fourth-quarter earnings call with investors. “We have plans in place, coming in January, to make sure that we drive the right amount” of sales in relation to profit margins. Read More »

The debut of LGI Homes Inc., a builder of entry-level homes, on the public market Thursday so far has gone much like those of other home builders this year: lackluster.

LGI’s stock priced Wednesday night at $11, below its anticipated range of $13 to $15. As of Thursday afternoon, the stock was trading at $12.27 on the Nasdaq.

It has been a tough year for home builders to conduct initial public offerings, though many small builders are starving for the low-price capital that the equity markets can deliver to those who qualify. Investors are cowed by a slowdown in new-home sales since last summer, interest-rate volatility and uncertainty caused by debt-ceiling wrangling in Washington, D.C. Read More »

Extell’s planned tower on 57th Street in Manhattan, shown at center in this rendering.

For years, luxury builder Extell Development Co. has been planning a soaring tower on 57th Street and Broadway in Manhattan. Now we get to see what it looks like.

Last month, the developer included renderings of the tower as part of a presentation to the city’s Landmarks Preservation Commission, showing a glassy skyscraper that reaches up to 1,423 feet. That would be about 40% taller than Extell’s One57, a super-luxury tower opening in coming months a block to the east. The new tower would be the tallest residential building in the country.

A spokesman for Extell, George Arzt, said the renderings showed a “work in progress,” and the building is “not a finished product.”

Still, the renderings give a sense of the general look of the Adrian Smith + Gordon Gill Architecture-designed tower, and show what could be next on the so-called “billionaires’ row” emerging on 57th Street. Read More »

As if there isn’t enough to fret about in the new-home market, home builders have provided investors with another concern: the potential for declining profit margins.

Roughly half way through earnings season for home builders, margins have become the new focal point of investor angst. The concern is that builders’ profit margins might start to dwindle as early as next year if, as many expect, price appreciation for new homes loses more momentum than the rising cost of building homes.

Such jitters can reverberate for investors because the home-building industry is quite cyclical. Investors constantly scan for the latest sign that the market is gaining steam, plateauing or starting to decline. Read More »

Home builders are scaling back payment offers to reduce the interest rate on buyers’ mortgages after new-home shoppers say they would rather have other incentives. That would indicate that the 1 percentage-point rise in interest rates from May to September didn’t spook many buyers as badly as the market feared, because rates still are relatively low.

When a builder or mortgage originator buys down a rate, it pays the lender money up front to charge a lower interest rate in the loan’s first year or two. The reduction is usually a percentage point or less. Such buydowns often are used to entice home buyers who are concerned about high interest rates. Read More »